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Guraaf's  Instablog

Guraaf
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I immigrated to the US in 2006. I started investing in India in 1999 just when the Indian markets were taking off. India had its share of Irrational Exuberance and eventually I lost quite a bit in Tech stocks from 1999 to 2002. After that I slowly moved on to cyclical (capital goods,... More
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  • Swiss Dividend-paying stocks
    Close on the heels of German and British dividend paying stocks, I now discuss my pick of Swiss dividend yield stocks.  Switzerland is economically very stable and hasn't shown great fiscal responsibility.  The Swiss Franc is also a nice diversification along with other global currencies like the US Dollar, British Pound, Euro and the Yen.  Swiss companies do deduct the foreign taxes at the rate of 35% though you can claim dollar-for-dollar tax credit in regular brokerage accounts at the time of filing taxes via Form 1116.  This benefit isn't available for tax-deferred (retirement) accounts so the Swiss stocks may not suited for such accounts.
     
    1. Novartis (NVS) - 4%.  This is my favorite pharma stock that has grown dividends at a CAGR of 17% over the last 5 years.  It has substantial presence in all major pharma segments and has gone big time into eyecare with purchase of Alcon that makes devices and surgical instruments.  No other big pharma company is present in this segment and it is growing fast.  Novartis also entered the vaccines business in a big way a few years back with the purchase of Chiron.  They have a biotech arm as well as various OTC brands and nutrition related products.  The only issue is that their biggest drug - Gleevec is coming off patent soon but I think their pipeline is pretty robust.  It pays dividends only once a year though.
     
    2. Nestle (NSRGY) - 3%.  This one is listed on the Pink Sheets OTC exchange that typically gives the impression of smallish off beat companies.  However, this isn't the case with Nestle which is one of the largest foods company in the world.  Their global reach is unsurpassed and their products have instant brand recognition around the world.  Extremely well managed and still growing in spite of its huge size.
     
    3. ACE Ltd (ACE) - 2%.  The yield is low on this insurance giant but I have been looking to buy some financial companies outside the US while nobody wants to invest them after the economic crisis of 2008-09.
     
    4. STMicroelectronics (STM) - 6%.  It is a huge semiconductor company that has various engineering facilities all over Europe though the headquarters are in Geneva.  They have a huge product portfolio though they haven't been able to produce substantial growth in profits over the last few years due to serious competition from Broadcom, Qualcomm, Texas Instruments and other Chinese/Taiwanese players.  The dividend hasn't really grown over the last 5 years but it appears that the management is more committed to dividends now with decent hikes in last couple of years.
     
    Disclosure: I am long NVS, STM and have limit buy order pending for NSRGY
    Tags: NVS, NSRGY.PK, ACE, STM, Dividends, Switzerland, Yield, International
    Dec 28 6:10 AM | Link | Comment!
  • British Dividend Yield stocks
    I recently wrote an Instablog on German companies that pay decent dividend yields.  Now I turn my focus on British stocks.  I had mentioned earlier that the biggest issues with investing in foreign companies listed on the US stock exchanges are:
    a) currency risk, 
    b) irregular dividends and 
    c) tax deducted by foreign govt on dividends
    These aspects don't bother me at all since I am looking to invest for the next 5-20 years and I am still earning so don't need an income stream.  Also I buy all stocks in regular brokerage account so can claim tax credit for all foreign taxes paid.  I like British stocks especially because they do not deduct foreign taxes and hence I can buy them in retirement account as well.  A lot of the British companies do business around the world due to historical reasons when England had many colonies.
     
    1. AstraZeneca (AZN) - 6%.  British pharma giant that was formed a few years ago when Astra of Sweden merged with Zeneca of England.  AZN has its share of big-pharma patent-type of issues but I feel that the dividend for this stock is more reliable than some of the other big pharma.  It has also raised its dividend in each of the previous 5 years and has a Dividend CAGR of 9%.
     
    2. Vodafone (VOD) - 6% (excluding the special dividend for the current year).  Cellphone operator that has provides wireless services around the world.  They have significant presence in the emerging markets.  They also own almost half of Verizon Wireless (the rest is owned by Verizon).  Their global footprint makes it my favorite telecommunication and div yield stock.  The dividend CAGR for last 5 years has been approx 7%.
     
    3. Unilever (UL) - 3.6%.  An Anglo-Dutch food and personal care giant based in London and Amsterdam.  It is similar to P&G in many ways - had a huge presence in the emerging markets though the company had a complex organizational structure earlier and couldn't benefit much from the explosive growth in some markets.  It is now becoming far better organized.  The dividend CAGR is about 5%.
     
    4. National Grid (NGG) - 6%.  Electric and Gas Utility company that has interests in New England and New York also.  The dividend has been flat over the past five years.
     
    5. British American Tobacco (BTI) - 4%.  Century-old tobacco giant that has grown dividend at a CAGR of 11% over last 5 years.  Own Dunhill, Kent, Pall Mall among many other brands.
     
    6. BHP Billiton (BBL) - 3.5%. British/Australian mining giant that has increased rapidly over the last 5 years.  The CAGR is 17%.  I prefer BBL over BHP which is the Australian ADR so there is some tax deducted.
     
    7. GlaxoSmithKline (GSK) - 5%.  Pharma giant that hasn't grown dividends in the last 5 years.  I haven't  yet figured out if they have any major patent-cliff kind of issues and how well are they growing in the emerging markets.
     
    8. BP (BP) - 3%.  The dividend yield is much lesser than a lot of the other big-oil companies after BP cuts its dividend to pay for the oil spill in the Gulf of Mexico.  I do expect the dividend to be slowly increased in the next 2-3 years and the stock price to increase in anticipation of the dividend growth as well as actual dividend increases.  I would buy BP on a bad day, e.g., if they have any setbacks related to their joint ventures around the world or with the legal issues related to the oil spill since I do expect to resolve these issues over the long term.
     
    Disclosure - I am long AZN, VOD, UL, BBL.  I have limit buy order for BP and NGG.
    Tags: AZN, BBL, BTI, GSK, BP, VOD, UL, NGG, Dividend Yield, Dividend Growth, International
    Dec 27 9:31 AM | Link | Comment!
  • German Dividend Stocks
    I am a total returns investor but lately been focusing on dividends and a bit of dividend growth as well.  I guess I have been lurking in Investing for Income sections for too long now.  I decided to write a few Instablogs on foreign stocks since they are a bit less covered by the regular authors than the U.S. based companies.
     
    The biggest issues with investing in foreign companies listed on the US stock exchanges are:
    a) currency risk, 
    b) irregular dividends and 
    c) tax deducted by foreign govt on dividends
    These aspects don't bother me at all since I am looking to invest for the next 5-20 years and I am still earning so don't need an income stream.  Also I buy all stocks in regular brokerage account so can claim tax credit for all foreign taxes paid.
     
    Here are a few German picks (I plan to write more instablogs over the next few days with other countries and investing ideas).  The dividend yields are all approx.
     
    1. Siemens (SI) - 3.4% The German counterpart of General Electric.  They had a few issues with US authorities about bribery/accounting etc but that is all past and they pushing big time to grow revenue in the US (though this goes a bit against my goal of finding foreign companies).  The dividend yield is great and they are well diversified.
     
    2. BASF (BASFY) - 3.4%.  Another German mega-cap.  Chemical giant that gives a decent yield and is growing around the world.
     
    3. Bayer (BAYRY) - 2.6%. Chemical giant with interest in pharma, crop science and material science.  That in itself is an amazing mix of businesses that are not unrelated.
     
    4. E.On AG (EONGY) - 7%.  Electric utility that has fallen quite a bit given German government's decision to move away from nuclear power.  They haven't increased dividends over the last few years now and going forward it wouldn't surprise me if the dividend is cut by 10-15%.  But I am still a buyer.
     
    5. Allianz (AZSEY) - 6.5%. Insurance giant that reduced dividend during the 2007 collapse but has since increased the dividends.

    I am long Siemens, BASF, and E.On.  I have a limit buy order for Bayer.
    Tags: SI, BASFY.PK, BAYRY.PK, EONGY.PK, AZSEY.PK, Dividends, Foreign, Germany
    Dec 23 7:53 PM | Link | Comment!
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